01/11/21

SINGAPORE: Jurisdiction considers modifying incentives as G20 leaders back tax deal.

As published on reuters.com, Monday 1 November, 2021.

SINGAPORE, Nov 1 (Reuters) - Singapore will consider how to modify its tax incentives, its prime minister said, after leaders of the world's 20 biggest economies endorsed a global minimum tax aimed at stopping big business from hiding profits in tax havens.

The minimum tax rate will impact how Singapore attracts investments, as tax incentives have been "one of the major tools" used by the city-state's Economic Development Board, together with grants and other schemes, Lee Hsien Loong said, in comments published by local media on Monday.

"We will have to see how those will have to be modified," he said.

Major corporations face a minimum 15% tax wherever they operate from 2023 to prevent them from shielding their profits in offshore entities under the tax deal. 

Singapore, a low-tax jurisdiction home to regional headquarters of several multinationals, including Alphabet's (GOOGL.O) Google, Microsoft (MSFT.O) and Facebook (FB.O), has a corporate rate of 17% but provides incentives and schemes which reduce the effective rate.

"I foresee there will be tougher competition for us. But we will take it in our stride," Lee said.